‘I tried Martin Lewis’ Penny Challenge – I saved £1,000 and barely noticed it’

I’ve done the money saving expert challenge for a few years now but with a few tweaks this one was easier than ever and had an unexpected result

Christmas is always a big hit when it comes to the finances so anything that will help it worth go. After struggling for years with blowing more than I had in December then picking up the pieces for the next few months a few years ago I decided enough was enough.

I turned to Martin Lewis’ Money Saving Expert site and spotted its 1p Savings Challenge and have not looked back. It sets out that by saving an increasing amount daily over a year you would end up with almost £700 – an amount definitely not to be sniffed at.

Under the challenge you save 1p on January 1 then up the amount by 1p a day. It means you save 2p on January 2, 3p on January 3 – then continue until you are saving 365p on December 31 (or 366p in a leap year).

But what I love about the challenge is that it never costs more than £25.41 in a single week. Even better – by making a few small changes you can keep it well below that.

When I first attempted the challenge six years ago I knew I’d have to stick to it perfectly while I got used to it – I’m definitely a follower when it comes to rules. At the time I was sorting my finances out by switching pretty much all my spending to cash where possible which made it easy and it was fun to see the coins mounting up – although it did take two money boxes to fit them in by the end.

By December 31 I had a grand total of £667.95 – although I had already used the bulk of it over the December weeks otherwise it would have been too late for my Christmas spending. The whole experience was pretty straightforward and it made a big difference to Christmas, taking away the financial worries which always made it harder to actually enjoy the celebrations.

I was also in the lucky position of having a bank account at NatWest with my local branch having a coin machine which I could throw the contents of my two money boxes in then the balance was paid straight into my account without any counting by me.

Once I felt I’d got the hang of it I began to made a few tweaks making it easier than ever to do – and it has even meant I have saved much more than the original amount. While I always made sure I did the basic challenge I found by doing some things slightly differently by this Christmas I had managed to save just over £1,000.

In the second year I avoided the more expensive weeks which fall at the end of the challenge by paying for some of those days earlier in the year when the weekly cost was just a few pounds or less. So in January I paid for some of the days in December. So in the first week of January, I saved the 28p for the first seven days of the challenge plus an extra £3.65 to cover that due on December 31 making a total saved of £3.93.

I carried on doing this throughout the early part of the year and if I had spare cash or was clearing out my purse of coins I paid off other days. This included some in August meaning I had less to find when the schools off which inevitably make it more expensive.

I used the MSE tracker to mark off the days I had paid making it easier to check which ones were covered. Incredibly, despite fiddling with the concept, I reached Christmas with the full amount in my account.

Over the years I have continued to make slight changes where I have spotted it could help me. Covid meant people moving away from cash so for the past few years I have done a mixture of coins and bank transfers – generally coins for the early part of the year and bank transfers into a separate Christmas Saver pot I set up with my bank for the bigger sums.

I also swapped my start date to December 1 which means I don’t have the big savings payments at the end of the year when the bigger bills are landing. Over the time I’ve been doing this I have seen the amount I have saved grow every year and this year was better than ever.

The challenge has encouraged me to keep adding spare coins I have to the pot without counting them. This year I saved £704.56 in the bank so more than nailed the challenge.

But the biggest surprise came when I counted up my money and went to pay it into the bank – I had more than £300 between notes and coins. Even keeping £150 in cash I paid in £194.55 taking my grand total to £1,049.11

The 1p challenge is a real life-changer. Christmas has one less stress for me and I have worked out the way it works best for me.

The MSE challenge and its tweaks

How it works

You start by saving 1p on January 1. On January 2 you save 2p then 3p on January 3 and then keep doing the same for the full year. So you save what you saved the day before, plus a penny more each day – up to £3.65 saved on the last day of December. If you started on 1 January 2023, then by 31 December 2023 you’ll have saved £667.95.

There are different ways to take the challenge depending on how you like to look after your money. There are different solutions if you are a cash person or prefer a bank transfer.

1. The literal approach – a jar: For those who use cash the challenge is traditionally done by putting loose change into a piggybank or jar every day.

2. The more realistic approach – transfer the cash: Many people don’t use much cash these days making it harder to do the literal method so instead you could manually transfer the money into a savings account via online banking, in small amounts if your bank allows, or monthly amounts.

You need to check first if your bank lets you transfer small amounts – some, including Monzo, will let you build up from 1p each day. This can be either a daily task or you could put away the week or month’s total in one go if you prefer. This is how much you need to save over each month according to MSE.

Alternatively, you can split it equally over 12 months and set up a standing order. If you do this you will need to set aside £55.67 a month (that’s a rounded-up figure for 12 equal instalments, meaning you get an extra 9p during the challenge if you use this method).